The Role of Education Quality for Economic Growth

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Abstract

The role of improved schooling, a
central part of most development strategies, has become
controversial because expansion of school attainment has not
guaranteed improved economic conditions. This paper reviews
the role of education in promoting economic well-being,
focusing on the role of educational quality. It concludes
that there is strong evidence that the cognitive skills of
the population-rather than mere school attainment-are
powerfully related to individual earnings, to the
distribution of income, and to economic growth. New
empirical results show the importance of both minimal and
high-level skills, the complementarity of skills and the
quality of economic institutions, and the robustness of the
relationship between skills and growth. International
comparisons incorporating expanded data on cognitive skills
reveal much larger skill deficits in developing countries
than generally derived from just school enrollment and
attainment. The magnitude of change needed makes it clear
that closing the economic gap with industrial countries will
require major structural changes in schooling institutions.